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Blinken: "World Should Not Be Fooled" By China's Peace Plans; UBS Buying Rival Credit Suisse In Bid To Stop Banking Crisis; Amazon To Lay Off 9,000 Additional Workers; Flight Attendants Push To Ban Infants On Laps; L.A. School Workers Poised To Strike Over "Unfair Labor Practices". Aired 2:30-3p ET

Aired March 20, 2023 - 14:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[14:30:00]

EVELYN FARKAS, FORMER DEPUTY ASSISTANT SECRETARY OF DEFENSE FOR RUSSIA/UKRAINE/EURASIA: Because, if Vladimir Putin wins in Ukraine, he will continue to pressure - right now, there are demonstrations held in Georgia more recently - I'm not sure whether they've petered out - in the Republic of Georgia where Russia continues to occupy that country.

That is a target for Georgia. The Georgian people don't want to be under the Russian thumb.

If he wins in Ukraine, he'll turn to Georgia, he'll turn to Moldova, and then he will challenge NATO, make no mistake about it, and then we will be in a world war.

So we want to bring the war to a close fast as possible in Ukraine, which, by the way, a lot cheaper than fighting on and on. And, of course, including more of Europe and NATO.

BORIS SANCHEZ, CNN HOST: Even before the invasion of Ukraine, it was clear that Putin's aspirations and designs went much further into Eastern Europe.

Evelyn Farkas, we have to leave the conversation there. Appreciate your perspective as always.

JESSICA DEAN, CNN HOST: If you're one of those parents who flies with your baby in your lap, listen up for this. Flight attendants calling for a ban on that. They want you to buy babies their own seat. Details on that, next.

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[14:35:27]

DEAN: In a major move aimed at stabilizing the global banking system, Switzerland's biggest bank, UBS, agreed to buy its ailing rival, Credit Suisse, for $3.25 billion. That's about 60 percent less than what the bank was worth when markets closed Friday.

SANCHEZ: We're joined now by CNN's Matt Egan and CNN economics and political commentator, Catherine Rampell, who is also a columnist for "The Washington Post."

Matt, let's get a refresher. These problems with Credit Suisse are not new. How did we get here?

MATT EGAN, CNN REPORTER: Right. This bank a mess literally for years. And we've seen officials around the world scrambling over the last 10 days or so to try to put out fires. Right? First, it was Silicon Valley Bank, then Signature Bank here in the U.S.. Then it was First Republic, a regional lender. Now, all attention on Credit Suisse.

You mentioned landing this $3.25 billion takeover deal from UBS, 60 percent discount from where it was.

This is a big transaction, not because it creates this $1.7 trillion behemoth, but it's the first time since the 2008 crisis that regulators allowed one of these big, global banks to merge with another one.

In fact, this time, it was actually done at the behest of regulators in Switzerland that were really worried because Credit Suisse was facing this crisis of confidence.

This deal is getting applauded, I think, on Wall Street. The U.S. markets moving solidly higher today. I think investors are hopeful that this means one of the weakest links in the system is getting strengthened.

Regional banks in the U.S., they're looking a bit more mixed. You can see the big board. The Dow up almost 300 points.

If we look at regional banks, we see they are kind of mixed. First Republic Bank is down 39 percent today alone. And this comes after credit ratings firms, S&P and Moody's, they cut First Republic deeper into junk territory over the weekend.

We did get positive news on the banking sector. A U.S. official telling CNN that deposits at the small and midsized banks, they have stabilized. Those big cash withdrawals out of the small banks into the big banks has either eased or stopped or even reversed, in some cases.

And that, of course, is very encouraging and something U.S. officials are watching very closely.

DEAN: And, Matt, how significant is this UBS takeover? Give people perspective on that.

EGAN: Yes. I mean, I think this is a very significant deal. And I think that it shows how concerned regulators had gotten in recent days about Credit Suisse. This was a stock that was collapsing.

Some of their counterparties reportedly backing away from the bank. And also, we saw big deposit outflows out of Credit Suisse.

I think the good news here, from a U.S. perspective, is that U.S. official tells CNN that U.S. banks have pretty limited exposure to Credit Suisse at this point. Again, the hope is that this emergency rescue sort of stabilizes things.

SANCHEZ: And, Catherine, to you, give your take on the news that Matt mentioned that deposits at smaller and mid-sized U.S. banks stabilized in recent days. Is that a signal that things are back on track?

CATHERINE RAMPELL, CNN ECONOMICS & POLITICAL COMMENTATOR: We don't know if they're quite back on track. This is a positive development, I would say.

But it does still look like deposits are exiting the bank, even if it's not -- the banks, plural, rather - even if it's not quite the same volume as before.

I think it's rational. If you are a depositor in one of these smaller to medium-sized banks, and particularly if you have a deposit that is not fully insured because it's a larger deposit, over $250,000, you might say, hey, what's the down side of moving my money to one of these big systemically important institutions where I know it will be protected?

Of course, if everyone comes to the same conclusion at once, then you have a bank run and it becomes sort of a self-fulfilling prophecy that the money in the bank is not safe.

What you're seeing regulators try to do at this point, regulators and participants in the banking system, for that matter, is to try to instill confidence in these institutions saying, hey, they're safe.

It looks like today we may see, or in the next few days, we might see yet another rescue attempt for First Republic Bank, for example, orchestrated by JPMorgan and some other big players. We've seen one last week for this same institution.

[14:40:07]

It's all about instilling confidence so that people don't err on the side of pulling out their money and making things worse.

DEAN: So much of this is a confidence game.

Catherine, also I want to ask about a different topic. Amazon CEO Andy Jassy announcing today the company will eliminate 9,000 more jobs. Already had enormous round of layoffs earlier in the year.

What do you think is going on there?

RAMPELL: A lot of these larger companies that expanded during the early part of the pandemic are now having to re-evaluate where they allocate their resources. Right?

If you look at the retail and where housing sectors, for example, massive expansion early on in the pandemic. Now you're seeing consumption of the kinds of products you buy from Amazon fall back down to earth.

Amazon also looks like maybe pulling back on some employment in non- warehousing parts of its business, in cloud computing or other sectors. That may be the result of greater anxiety about the overall economy, rising interest rates, risk of recession, et cetera.

I think this is not the only institution or major company that right now is trying to re-evaluate how to position itself in this very uncertainly economy.

And I wouldn't be surprised if you see other big announcements from companies in the weeks or months ahead. Not necessarily signaling layoffs. Some may be. But other kinds of restructurings about how do you adapt to this very bizarre and unpredictable set of circumstances.

DEAN: Constantly making adjustments.

Matt Egan and Catherine Rampell, our thanks to you, both.

SANCHEZ: So the country's second-largest school district could be shut down starting tomorrow. Ahead, we'll tell you what workers in Los Angeles are demanding.

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[14:46:21]

SANCHEZ: We want to give a heads-up to parents planning to fly with kids under the age of 2. The union that represents flight attendants is once again calling for a ban on infants sitting on their parents' lap during flights.

DEAN: Right now, a child under 2 can fly without a seat. But the union is pressing for all passengers, no matter their age, to have a ticket and sit in a seat with a seat belt.

CNN's aviation correspondent, Pete Muntean, is joining us now.

Pete, this isn't the first time that flight attendants asked for the rule change. Why go back to it now?

PETE MUNTEAN, CNN AVIATION CORRESPONDENT: Jessica, the airlines and unions have been calling for this change for the last 30 years, but really getting new attention now, because of this FAA safety summit where this came up just last week, and those turbulence incidents that appear to be on the rise.

Let's look back to December, the Hawaiian Airlines incident. The flight from Arizona to Hawaii went through severe turbulence. And 36 people onboard injured, including a 14-month-old baby.

The FAA says, throughout these incidents and even worse if there's was a crash, your arms are not strong enough to hold onto a baby that is in your lap.

So the Association of Flight Attendants is renewing its call to have children under 2 in a car seat onboard a commercial airliner.

But also backed up by NTSB chair general, Jennifer Homendy, who says this is one of 25 recommendations the NTSB has made for new regulations from the FAA that would make turbulence a lot less dangerous.

Listen.

(BEGIN VIDEO CLIP)

JENNIFER HOMENDY, NTSB CHAIR: - various airliners. And it can be very dangerous, especially if you're not belted in. Make sure you're wearing your seat belt the entire flight. Not just portions of the flight, the entire flight.

(END VIDEO CLIP)

MUNTEAN: Let's think about this. A 12-month-old infant, 20 pounds is about the average weight. If you go through about 10 G.s, 10 times the force of gravity, that makes that baby weigh 200 pounds.

The former chair of the NTSB, Robert Zumwalt, says this. "You're required to put your laptop away. You should be required to have a baby on your lap strapped in, something that the airlines could do on their own or the FAA could do."

The big thing here, if you have to do this, make sure you have a car seat, front facing or rear facing, with this label on it, that red label, that says the car seat is certificated to onboard airplanes.

The forces in some of these turbulence incidents and even more extreme a crash can be really, really severe. They simply say it's just not all that safe - Jessica?

SANCHEZ: Yes. Really eye-opening when you put the details up there and the amount of weight you're carrying with the G. forces included.

Pete Muntean, keep us updated on what happens on that end.

Thanks so much, Pete.

MUNTEAN: Thank you.

[14:49:16]

So there's a nearly decade-old death investigation that has ties to Alex Murdaugh and his family and this cold case is getting a brand-new look. We have brand-new details, straight ahead.

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DEAN: Thousands of Los Angeles school employees, including bus drivers, custodians, cafeteria workers, are set to strike tomorrow.

SANCHEZ: And 30,000 teachers might also join the picket lines in a show of support.

Let's go to Los Angeles with CNN's Camila Bernal.

Camila, walk us through what the strike is fundamentally about.

CAMILA BERNAL, CNN NATIONAL CORRESPONDENT: Hey, Boris, Jessica. What's interesting, the union says this strike is not about the money. They're saying it's about how some of its members have been treated after they started asking for additional money.

Initially, the union was asking for about 30 percent in terms of an increase in salaries. The district offered about 15 percent.

I talked to the superintendent. He told me, look, we're willing to go higher but we're willing to negotiate behind closed doors.

But because the union says this is not about the money, they say avoiding a strike is very, very unlikely.

I talked to both sides, and here's what they told me.

(BEGIN VIDEO CLIP)

MAX ARIAS, EXECUTIVE DIRECTOR, SEIU LOCAL 99: Some have been harassed to the point where they've lost their job, they've lost income.

ALBERTO M. CARVALHO, SUPERINTENDENT, LOS ANGELES UNIFIED SCHOOL DISTRICT: We have not been presented with compelling evidence that there's widespread abuses. There are issues? Yes. Each one of them is vigorously investigated.

(END VIDEO CLIP)

[14:55:07]

BERNAL: Now, the district says the strike is illegal. So, we're waiting for a state labor board to weigh in.

In the meantime, both sides are preparing for closures Tuesday, Wednesday and Thursday.

The superintendent saying he's very worried about children not being able to go to school, are not going to have the food that they often rely on from the schools.

And the union says, look, we are worried about the children, too, but if you pay us better, then you're going to have better schools. Then you're going to have better education.

And they say they're going to continue to fight for this. And they're, of course, very thankful that the teachers are joining in because that means the school will have to close.

It's very complicated. There's more than 500,000 students here in L.A., and parents are trying to figure out what they're doing with their children - Boris, Jessica?

DEAN: We can hear them probably playing on the playground behind you.

Camila Bernal, in Los Angeles for us, thanks so much. Last-minute testimony today in the hush money investigation against

former President Donald Trump. Plus, new developments tied to the Trump probe in Georgia. We're going to have it all for you, next.

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